KEN METTLER: State's utilities need local control
Poor accounting and a lack of accountability by the large utilities in California, together with ineffective regulatory oversight, require that we move to greater local control that allows ratepayers access to reliable energy supplies and a voice in the process, at a reasonable price.
Inherently schizophrenic, the California Public Utilities Commission seems to want to do the right thing. For instance, the PUC is supposed to, according to the mission statement listed on its website, "obtain the lowest possible rate for service consistent with reliable and safe service levels." No question, that's a good thing.
But in reality, the Commission, as it is known to insiders -- legions of lawyers and lobbyists that daily walk the halls of its cavernous San Francisco headquarters -- operates more like the fox guarding the henhouse, as the high cost of having a presence in the "building" and having to wade through reams of arcane quasi-legal administrative proceedings actually prevents all but the most tenacious, intrepid and well-heeled individuals from having a voice in the rate-making process. And perhaps more importantly, the current process prevents holding individual commissioners -- appointees of the governor -- and its supplicants, the big utilities, directly accountable for their actions.
The consequences of PUC decision-making range from the selection of the type of gas or electric meter installed at your house to determining the ultimate price a consumer pays for electricity and natural gas. The financial implications are also enormous. The utilities understand that and work feverishly to protect their "guaranteed rate of return" from ratepayers and to minimize any costs that their private shareholders might have to bear. It's a delicate balance, one many suggest is tipped in favor of the utility shareholder.
In a general rate case, it cited maintenance that had been deferred, and which its ratepayers had previously paid for, to justify further additional rate increases. This has been an ongoing process for years.
Ignoring input and outcry from local ratepayers, the PUC has not been nearly tough enough on safety-related activities and functions. It has not only failed to ensure that PG&E completes safety-related maintenance, but also has failed to ensure that PG&E maintains proper records necessary to ensure system safety, in spite of what the PUC's mission statement says.
Recent news stories have told the all-too-familiar story of PG&E asking customers to pay again and again, most recently, for an additional $175 million in pipeline improvement projects, which customers had apparently already paid for in a rate hike three years ago.
Behaving like bosom buddies with the PUC, Pacific Gas and Electric has been trying to determine what rate increases utility customers will have to endure in the near future through three general rate cases. PG&E had previously asked the PUC for authority to increase rates to cover the cost of additional maintenance on its gas and electric distribution systems, but is back asking for more.
An old solution may be the best solution: The California Legislature and the PUC must take the shackles off municipal and public utilities to allow residents of local communities more local control over the provision of electricity and other essential utility services. These nonprofit entities are governed by a local board of directors elected by local voters. They set rates and policies for the district, with the goal of providing the most benefit to customers. And since the ratepayers are also the "shareholders," there's no middleman markup or investors to satisfy, only constituents. They hold regular local meetings, which are open to the public. And here's the kicker: Municipal and public utilities can provide their services at a discount over what the big investor-owned utilities charge.
Sounds simple, right?
The PUC has not been effective at protecting ratepayers from utility company waste and abuse, or with safety issues, making a strong case for more local input and participation by ratepayers. PG&E has received far too much leeway for its safety violations, high rates and, most recently, the practice of asking ratepayers to fund future projects, only to spend the money elsewhere, and then be allowed to ask the PUC for additional rate increases for the same projects. It's time for a change.
Power to the people.
Ken Mettler is the president of Californians for Fair Utility Rates and immediate past president of the California Republican Assembly.
